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Free Forex Signals Forums General Trading Discussions What factors that are moving the currency?

This topic contains 4 replies, has 2 voices, and was last updated by Profile photo of masonlee masonlee 3 years, 5 months ago.

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  • #27318
    Profile photo of masonlee
    masonlee
    Participant

    Hi,

    I found that some time when there is no economic data are released for a currency pair, the price of that pair still move quite a lot and quite volatile.

    Some time, even when there is some economic data are released, the price of the currency pair move in opposite direction or just did not move, it seem like there is some other factors that are affecting the movement of a currency.

    Anybody here can list down any possible factors that may affecting the price of a currency?

    Mason

    #27322
    Profile photo of PipHut Team
    PipHut Team
    Keymaster

    Hi Mason, there are lot of different things that can move price that are unrelated to actual news events. For example, corporations all over the world are constantly buying and selling foreign currencies to enable their global operations. Speculators are constantly buying and selling for profit. Even tourists exchanging money in a foreign country is a FX operation.

    #27343
    Profile photo of masonlee
    masonlee
    Participant

    Thanks for the explanation. Since there are a lot of things that can move the price, seem like it is impossible to know every single factor. So when we trade, is it enough if we just follow the news?

    #27347
    Profile photo of PipHut Team
    PipHut Team
    Keymaster

    is it enough if we just follow the news?

    That’s a great question without an easy answer. In a perfect world, yes, it would be enough to just follow the news but in reality it is not the news that drives the exchange rate – it is how the market interprets that news. So, in essence, what drives the exchange rate is a combination of rationale and trader emotion. For example, in 2009, when the global markets were very “worried” about bank defaults every news event was viewed through the prism of “risk appetite.”

    Complicating that is news speculation. For anticipated news events, like interest rate decisions by Central Banks, traders regularly speculate what the next interest rate decision will be, or what the next several interest rate decisions will be, and if enough traders speculate in the same fashion then the market expectation is more important than the actual reported value, if that makes sense.

    #27394
    Profile photo of masonlee
    masonlee
    Participant

    Great answer! :)

    Appreciate that. It look like what we are trading now is the trader’s psychology around the whole world.

    I think predicting the crowd psychology is not easy but interesting.

    Is it only veteran traders with a lot of experience can predict the trader emotion accurately?

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